Ultra-hawkish: Let it fall, the Fed won't bail us out!

On Wednesday, Powell delivered a speech titled "Economic Outlook" at the Chicago Economic Club. Powell pointed out that unpredictable trade policy announcements have made the economic outlook uncertain. Powell said, "As the great Chicagoan Felix Bulow once noted, 'Life changes pretty fast.' For now, we can afford to wait for greater clarity before considering adjustments to our policy stance."

"No bailout! But I can give you some reasoning." His subtext was—the market decline is justified! Trump keeps changing tariff tactics, and companies frantically stockpiled goods in advance, leading to weak Q1 economic data. Under these circumstances, it would be abnormal if the market didn't drop. If the Fed forcibly props up the market, it would distort the pricing mechanism.

While saying "the U.S. economy's fundamentals are solid," actions speak louder—quietly admitting tariffs have caused stagflation (unstoppable inflation + looming recession). To avoid tariffs, companies hoarded imports in Q1, which ironically slowed GDP growth. Now even California is suing Trump over illegal tariffs.

Wall Street used to fantasize, "If the market falls enough, they'll step in," but Powell just ripped up that script.

In this situation, the Fed would rather watch stocks fall than let inflation expectations spiral. As for rate cuts? Wait until economic data gets even worse.

Meanwhile, Trump has already lost his cool.